and so that's why things like -- it cut such a nerve and things like net neutrality. >> welcome to communications. thank you all for being on the community indicators this week. ...

next a discussion about the world economy. according to a recent report the european debt crisis isn't always pushing into recession this also dragging the global economy down. we will hear more about that as well as look at u.s. fiscal policy posted by the council on foreign relations this is an hour. >> good morning. we can get started. >> for those of you that don't know me i am sebastian of the council. a couple housekeeping things. please remember this is on the record, this meeting. [inaudible] if you have a cell phone device [inaudible] [laughter] >> we agree to group for this meeting.

[inaudible] in the middle and john was a kind of anchorperson of this meeting serious when it was going a while ago, and he is now at seis and was recently at the international monetary fund. and, so, we obviously have from the size of the audience appreciation of the quality of the panel. we may also have an appreciation of the economy. it runs obviously to next week's meeting of the fed to the questions about the chinese slowdown and all of that. i thought we would start with europe since the sort of the altar on that may be the biggest

but in this case i guess the press conference would be in about half an hour. so i wouldn't as predictions but i will ask in a different way. i would save and send an -- vincent if there is an indication that there would be bombing purchases at the short end from the european central bank to support programs of the countries that do have programs have much do you get out of that? and let me put the question this way as it contrast with those that the ecb did at the last end of this year. with the eltros, it trimmed a billion bureaus in to the liquidity of the banks into operation. so you could see the money in the banks. in this case, what it is saying

it seems is we will support on a conditional basis of the economic reform programs, we will stop in the mid stream at such a time as they do not comply with the economic conditions. so it is a very conditional promise. how much confidence wealthy investors you think get out of that? >> so, with regard to the long term lending purchase operations, it is true that we are delineated, but they were also indirect. they were in direct the governor is a part because they required financial the institutions so they used those funds to support the government's. and it is true that over the ltro period, the government banks in italy and spain bought more government than the governments issued. what may be happening, and i hope you have all turned off your blackberrys about i'm not wrong by the time this sentence ends -- [laughter] is the ecb showing a willingness

to build a bridge. you emphasize the lack of specificity. i think the market participants will exercise the open-ended measure that is the bridge will be as long as it takes for politicians to be infrastructure required to make a more verbal institution. they have a lot of heavy lifting to do. they are in no way, shape or form of guaranteed that they will accomplish it. but, i think the open-ended part is what you should emphasize, not the lack of specificity. >> that would suggest, and maybe when he says i will do whatever it takes people really believe it. they think he's not going to say whatever it takes on the condition. >> there have been so many pledges that have proven to be disappointing. do you agree this has a

different quality to it that whatever it takes really means what it takes that we will be there to support with utter as long as it is needed? >> i do agree because what is a hint that they are talking about is an evolution of the constraints that the ecb is on its own policy. i think in the past this direct support is pale and you are seeing the kind of solution that of the ecb sees the mandate that allows it to build the bridge, and i think it is a very important change for the better. it's also important in terms of the constraints and in terms of the critics on the ecb board and the degree to which they create a kind of a veto over any sort of more active policy. if in fact what we learned today is that, or in the next couple of days, that it's prepared to go ahead even though there are a prominent minority that sort of is an opposition to this, that is again a very important easy constraint on how they can

respond, which i think is very important. and so, has said, this can go wrong in all sorts of ways, and this is no guarantee the ultimate outcome, but i do think that this is an important change. >> let me put on the table and get the reaction from this. one way in which it could go wrong. and that is it seems to me is opposing spain agrees to come forward and ask for a program, which of course they haven't done yet. but if the politics allows for that to happen, then spain is eligible for this purchase of the sovereign bonds. but you still have a situation where the deposits are fleeing the spanish banking system so the banks are constrained in terms of how much they can extend credits. the price of credit is very high in spain, and that seems to me to suggest a very painful route out of the recession.

can the program work in the face of -- of the public sector and the ecb is supporting but the banks or credit constrained, can you work your way out? >> let's come back to what he said. there's a lot of heavy lifting that is going to be involved. it strikes me there is a lot of attention being paid coming into this is reasonable in that sensible. they are the folks that when the crunch comes taken show up in the morning with a lot of cash at the window. but i would focus more on the other things that are -- the ecb said its actions are conditional upon. those are very non-trivial. one that we should remember on the december 12th, the two important decisions that are coming up, won the dutch election in the constitutional court. i would have been surprised if they were going to be very specific about what would do in advance of the german court's decision which bears on the

legality and actions to provide among other things correct support to the banks not going through the sovereign. so they say we are willing to step up and do what it takes if the country act and engages in the adjustment program and hasn't specified what that means. of this question does that mean i am therefore not on emf. second, will the dsm be ratified and that in providing direct support to the banking system in the country like spain? so in a way although the attention has been on the ec be and what it might and might not do, it strikes me that it is the precondition to the ecb action that is the critical issue. the quality program and the nature, the ability of the ascent to provide direct support to the banks.

>> it is obviously sort of an important issue that if it continues is ultimately going to be something that can drive this. the points that johnnie are absolutely right and there's things going on and one of the of the things we mentioned is the european banking union is coming up and that is an important piece of how this goes forward which bears on us. so essentially if they can construct this banking union which will include the infrastructure that will allow you to deposit insurance, those are important microelements for how you deal with these and they are fundamentally on certain subareas agreements on both sides there is an awful lot of pieces that have to go forward. in a sense of what has changed over the last month to me the biggest change is a different attitude on the part of the ec and the way that it mandates

potential outcomes. skype the question you have to ask yourself is what is the year ago about is a social decision or economic decision? if it was a social decision, then it basically tells you the politicians have an unlimited pain threshold and the understand their voters and they are representing their interest. it is an economic decision, then the deposit flows do matter and they have to worry about the consequences for growth and for support of the national financial champions and at some point the leadership would get a phone call that surprises them and they may make a different position than they made previously. it really does rely on what is your vision of the future. >> it doesn't have to be either or. it's part of the complications of the answer is this or that, the answer is yes.

>> succumbing you could fully -- it depends on what is the ending what you see as the future and what you see the european unification on the and on the north and south texas with the east and west texas, the north and south is italy which is basically the two regions where the common flag held together by the transfers through which you could argue plausibly that both of them hold up the total on the other hand east and west is the german unification, the two regions pull together large transfers from the rich to poor and pulls in 14 years later you stapled each other together. in the end for bring about the economic one then the costs now bearing with the crisis of manageable.

it on the other hand it's almost an unlimited sequence of transfers to stitch the whole thing together that is a much different termination. >> is it a social contract? saying that you don't have the answer. >> we don't know which it is. there is uncertainty about policy-making and uncertainty about the kind of determination over the extended period of the month. the motives behind the design of the principal and the financial markets are going to take on the institution and they are going to find out whether the politician is limited. >> if i could just -- it's interesting to think that the

german unification in this context. the wall came down on november 9, 1989. the monetary union was implemented in the full political unification was on october 3rd 1990 flecha pepfar. they went to the full integration and the fact that they were able to do that very well not flawlessly but extremely well the institutional constraints of for doing this kind of things are not the real issue would of course lay behind that was the more or less instant political consensus where you are going in the end and that was never in doubt. in some sense the question that is raised. we don't have that here. the more you hear the politicians struggle around what

is the political commitment to the endgame it's sort of all of those doubts coming back. >> one prism or one sample of the doubts about whether the project has really got the political umph behind it to work is the special of thinking union because there was talk of a banking union and this is the quid pro quo for allowing the bailout to help the vince directly but the definition of the banking union goes from sort of a fig leaf of the european banks of the biggest banks which is one version of it through the bank supervision of all. it has potential transfer most people think it is politically in plausible in the next period,

so how do you see this? is in their uncertainty around it >> let me take a step back and give some perspective on this. when you think about the critical comment about the sustainability of the project they centered around number one, the year autozone is not an optimal currency area integrated come and second, it lacks the fiscal or governmental institutions necessary to run the currency. both of those issues were evident to the participants from day one. the idea was not with a doubt about the zone of being an optimal currency area. the decision was to try to make it an off tunnell currency area command of the currency was going to be the fulcrum that was going to force the integration and reform the was going to make it an optimal currency area.

what was not foreseen as that the mechanisms of discipline that were supposed to drive that which was no exit walls for once you get and you can't go out and the idea was you are forced to adjust. who knew at the time that greece, portugal, ireland would have access to huge amounts of credit an extremely fine terms it was the market discipline that failed primarily toward least significantly. it's called the government issues that were understood right from the start. there was no clear consensus about what is the ultimate goal of the united states and europe. is the goal of the one hand or is this just a customs union? it's so dissimilar as many have pointed to the formation of the united states. but here again the idea was let's not try to reach agreement

on the end result because there is no consensus but let's take a step at a time and develop the institutions necessary as the problems come up. what wasn't perceived as the context of which the huge decisions would have to be taken was the mother of all financial crises from the united states. so, the pressures are far greater than we are anticipating and the year being forced into making big decisions. we are going to find out if they are willing to make the sacrifices necessary to sustain and. yesterday the peterson institute presented an interesting study of spain and italy whether it was sustainable the conclusion is of the plausible scenarios and the answer is yes. under the circumstances it seemed to me surprising if the project would be abandoned in a sense in that context. >> we and interesting meeting for the fed. a friend of mine that watch it says the variance in the

potential outcomes are higher than most meetings he can remember. tell us how we using about the debate on the policy following the speech. >> i think that there is one undecided member among the participants to its chairman ben bernanke. that's why the variant is higher when you are trying to forecast the behavior of 12 or 19. when it's one, its larger. the reason is because chairman bernanke cares about the consensus of all of the 19 policy makers, not just the 12 people that vote because everything is multi-year in nature. he cares about the political legitimacy of the institution, and he does worry about what happens and what that implies for the probability of the federal reserve reform act of 2013 which isn't a trivial possibility, and then third, he

has a group of people that are doubtful of the efficacy of the policy instruments for their ability to use them in the not sufficient magnitude the last time they said their instrument was in june and on the basis of that, the forecast we would have an unemployment rate that tracks of the adjustment in the inflation that was everywhere of of the goal. that tells you it's a policy-making committee resigned to the poor economic performance and doubtful about their instruments. we think that the natural thing for them to do is to work on interest. >> the add another year to the forecast and say guess what we are treading water for another year, it's appropriate to stretch out the promise to keep interest rates low. but they are on their record for is extending their operation twists and purchase and sale of treasury securities to the year-end. i think it is a perfect opportunity in december to

revisit the balance sheets. in december precedence suggests to out of three times they will know who is president of the united states they will know who is running the house or the senate and has a lot more clarity on the fiscal question they also miss the american people of how interventionist they won their policy issues to be so they can begin informed decision of the balance sheet. the rate management to deal with what is a pressing problem the unemployment rate, too high and unacceptable downside risks to inflation but that's holding the bridge until december.

my personal study before it worse in the second time and this kind of -- using to be resisting that or do you have the emphasize that? the first round of that came in 2009 the markets were still very disruptive was naturally going to be more reflective than of the more normal times. from place to go back to 2010 and what the speech we made the point then. so i d't think that this notion has been less effective in the more recent times than it was a first round as anything particularly surprising or new. i think in my reading of it was that the german kind of went out of his way to stress the fact that it still is effective. that is a tool they have available to them to use as needed. i think it's pretty clear that as has been said they're frustrated by the fact they don't have more effective tools

as a consequence for that, they are looking at everything they can imagine that they might do otherwise. for example, what the bank of england is doing with its funding for the lending program. i think that there is also the sort of interesting -- is there a way to sort of evolves the communication around the rates, or perhaps in that qe that might make it more effective by typing the economic conditions in the future. i think that while those things are going on and they are kicking the tires pretty hard on that, i don't think they are likely to come up with answers they haven't come up with before. so we are basically backed to those choices, and essentially that is the with the chairmen from the and the way that he reviewed and the last couple of years. >> if we could, they are as expert as anyone working on the fed. reading the chairman's speech i think he made a very large claims for the impact.

he said the output was 3% higher and employment was 2 million higher than at what has been without. and i thought if they read the last sentence i thought that can at the speech as close to the declarative sentence on the future policy as i had ever heard the fed chairman give him. and unless there is a change in the economic outlook we have to do more. >> they are reading forward and there will be more policy accommodation and the sequence to that policy accommodation for the central banks and not the natural order as you work on the rate management and then you work on the balance sheet. so i read the last sentence to say those things are coming unless the data or surprisingly to the upside the likelihood of that is pretty low. there's a couple of papers with them governor ben bernanke on the quality of easing. eight or nine years ago most

things in life had diminishing marginal returns. it's not surprising then they do, too. it's a lot like sterilized intervention. when the markets are disorderly, when you don't have a lot of capital, when the treaters don't have convictions, you don't have the possibility of the capitol coming in from other markets, then actions of the central bank can have large effect. when, however the markets are orderly, when the traders of convictions, when there's a possibility of the capitol coming in from everywhere they typically don't have much effect. the last point is this was a crisis in the financial markets and the financial institutions and also in the economics and finance. our models don't work particularly well. the idea that you can assert one percentage point a consequence and then put it into one of those models and then grind out a solution that there are that

many more employed as a consequence is probably a stretch beyond what we are capable. [laughter] >> one more question related to the financial regulation that calls again, this may be for you. i guess the sort of most striking development in the u.s. financial relation was this decision to back off the money market funds. do you see that as we have had some regulatory action on the banks, shadow banks much, much less, the money market funds are a part of the system, and they are busy saying we can't do this. does it leave -- it is and ought to be fsoc or what happens next? >> this is an important issue. in some ways, they have made the case already that the money market funds are a systemic

issue. i think there has been a lot of work, and consensus around that, some of it done by some people in the audience here. i think now the fact that they have been unable to address this one of the things fsoc was put into place to do is address the situations where you have a systemic issue that isn't being address by the primary regulator. and so now this is very much in the fsoc's agenda. i think it has to become and if there is obviously complicated questions about exactly how you do this. one option is to be essentially put it back to the sec by making these systemic designation as a whole the first response would be to post on to address this issue again which may be the right way to go. alternatively, you could designate the money market funds as systemically important institutions themselves and have the fed take over some of the regulatory role. but, in some sense this is

exactly the situation, one of the situations dodd-frank was designed to address. and so i think in some sense it is a unique ever to be for the whole structure to essentially show it's worth. so i think this is an important issue. >> will be opportunity be taken? >> i am no longer directly involved. i think if we look at -- if you look at the first fsoc report is very clear to them that one of the principal systemic issues they identify as the money market mutual funds. i think the situation the year in now with the fcc having not activating demands action. and so obviously we are going to see who wins the presidential election, who is essentially turning the fsoc going forward. how long it takes to work this through it probably won't be tim

geithner. they would address that given this is probably going to be on somebody else's watch i am a little less confident, but i think the answer is yes. >> before we invite members to join the conversation, i want to put one more question to john about china, and that is china has had a couple of successes in terms of its sort of perceived participation in the global economic community. one was right after the lehman brothers collapse there was a global coordinated stimulus and china contributed handsomely to that one. in terms of training and balances, china showed a lot. so, these are good things. but it does strike me now that we have been discussing what the central banks could do in europe and in the u.s..

sweden just cut this and there's a lot of action around the world yet the chinese growth by the chinese standards have come down a lot. and the policy actions in china on some of the readings of it has been surprisingly cautious. do you think that we are coming after a moment where china may be nudged by economic leaders in other countries that we should share? >> interesting question. it's houseless low if you take a look for example of the forecast is calling for a essentially the soft landing in the eight and a half percent growth in china. certainly that is and double-digit but that isn't shabby, and in the context of a relative success and rebalancing of the economy towards the

stronger growth in domestic demand, and less reliance on the export because that is consistent in the imf forecast with a continued current surplus under 3% which is of course dramatically down from where it was before. what is on no news is that right is this a soft landing trajectory in which she would have to say things are obviously this difference in the prosperity of given sectors we see in the reason manufacturing data and china suggested a significant slowdown which would give pause and create the question of whether that soft landing view is for handling. and if so, i think that there is a general sense that there are policy leaders available to the chinese authorities that things are going much softer than they had anticipated. and it is the case then i suspect there will be not only external calls for the policy

actions, but even more importantly, domestic calls for action in the context of the second unknown which is the leadership change that is coming up in a matter of months. with of the new leadership as i understand and am committed to the rather activist set of economic policies, along the lines of the plan already adopted as the formal policy for those that haven't read it if you read it i'm sure most folks here would read on that list and say right, right, right. it is a liberalization market orientation etc., the reform of the siskel system, the reform of the banking system and financial system. let's see if it all gets done. but for right now, the question is how slow is slow. if this is a soft landing and then they are going to be fine. is it is worse than that, then there will be calls domestically for the different things to do. >> okay. that is the -- if with questions

from the members. right here on the aisle. the lighter tone should be coming. please come and speak directly into it. >> i wanted to ask the panelists returning to europe, to what extent do you believe that the labor market reform emanating from brussels would be a significant factor in the fixed? >> that is a favorite of mine and i will be a really quick. i always call that vision -- a call that the lisbon agenda fallacy. the notion that the labor market reform begins with legal changes and then emanate to the market changes is to get things backwards. i think how the labor legislation changes is the companies to come under pressure. they put pressure backwards on the work force for the improved performance and in the standard ways. if the cubs up against legal constraints, then the pressure comes against to the legal

authorities to the legislatures to make the appropriate changes so things can get going. i know of very few times i can think of the changes coming first of the legislative level without already having created without a swell of support from let's cut the corporate and the business sector. i think that is happening. and of course the place that is the poster child for that, that process was germany in the schroder government. >> i was on a panel title of which was the financial crisis in europe a blessing in disguise that it would then lead to reform and the would-be growth enhancing that the crisis would pay for itself. my answer was if it is a disguise it is a very good disguise. [laughter]

>> the answer might lead into this next question which is the two approaches here. the u.s. approach which is keynesian and easy money and the argument is that there hasn't been enough spending in the european approach which is austrian there is no credit available, and there is deflationary forced upon most of the population if you are not an economist which one is going to prove to have been a better approach. i don't think anybody's policies montenegro stars. spec we will have a diversity of opinion. >> we are looking at the experiences in the poll of the

22 advanced economies, and tears the bottom line. episode overhangs that you have it in a 90% are very costly the growth discount is on the order of 1.2% slower real gdp growth per year as long as you are in the debt overhang that those episodes are very long. the median duration is 23 years. so if you wind up with the debt by the time you get out of it, the level of debt is at a level of gdp that is a quarter lower than it had been if you never got there. and it isn't always about rates or market discipline to be the lesson out of the 26 cases of the significant debt overhangs wasn't market discipline forcing that construction. it's something else. so, i understand that the unemployment rate is high in many economies unacceptably high. we need for policy accommodation. we have to do that in a way that gets us to the tough for which

we have to consolidate. spaghetti free at the u.s. versus year up, one of the crucial distinctions is of course the u.s. benefits as a safe haven. and so in some sense we have the flexibility to deal with the problem over time in a way that other countries don't. if you compare us to greece we have the luxury of time in a way that they don't. and i think that that drives you to different answers. now, the obvious point that, you know, in some sense of the work that is described creates for the u.s. is you can't do this forever. you have to pay attention in the long run. there has to be a sort of solution that strikes a balance between those two things is i think important that if you look at where the fiscal debate is at this moment, what strikes me about it is it is only about the pace of the consolidation. in some sense the keynesian side of the debate is frankly not in place at the moment.

it really is the question of how fast we are going to do consolidation. not with or not we are going to do stimulus now and consolidation leader. that certainly affects me as i am a forecaster. but the united states is in this sort of very different position. you might argue japan, some with certain different circumstances to face different constraints in that environment but all i agree you have to deal with this problem and you can't get around. but we are operating under somewhat different constraints. >> everything is fine until it is not fine. >> this time is different. [laughter]

>> anyway all of this including vincent and the study was music to the ears of the folks of the imf who have this view for some time that this is how the situations have to be dealt with. but certainly he's right everything doesn't have to get fixed today but has to get fixed. and the key is that it has to be that people have to have confidence that it will be fixed, and that is the tricky part. manly how do you demonstrate convincingly that even though you are not fixing everything at once because you can't that you will fix it over time. >> certainly this fiscal deficits. senate among other things. >> can i -- >> go ahead. >> i think one of the things which i think is important through when you look at the u.s. right now, is if you look at the history of how we have dealt with these things to some

extent we went for one of these cycles we got our fiscal accounts on what seemed like an unsustainable path in the 80's and it became a retail political issue in the generated among other things ross perot running for president. that ultimately led to the political truce that put us on the path where we were in the late 90's which was in surplus. there were other things going on as like the productivity growth and a variety of other things, so what was not all policy choices but the point i would make is retail politics in the u.s. drove to the solution. i would argue we are in the same place. what is more than nothing else driving fiscal policy in the united states is the tea party. it's driving in a sense that they're saying we are on an unsustainable path and we have to fix it now regardless of the sort of concerns. now, we have a political system in which it is hard to get things done by design.

our system was designed to make it hard. that is with the checks and balances mean. so it is a messy process for us to get to that consolidated half. and yes, i totally agree there has to be confidence, but i would argue of thing that ought to give one confidence is luggage driving is not market pressure or the ims and posing on it, it is politics on the ground. so yes, the next six months is going to be incredibly. there's a decent chance you're going to go off the cliff because people are not going to be able to reach an agreement at the end. but i think the thing to remember is what's driving us more than anything else is the retail politics that wants to get us on the consolidated tough. it in the long run context that is the thing that ought to give some degree of confidence that we are going to ultimately fix this problem. estimate there are two countries on fiscal policy to market discipline and voter discipline

when you talk about market discipline it is like service in the military long periods of intense bouts of canada. they said there is no fiscal problem, so locally there is no market discipline on the united states. there is a voter discipline that is why we see him change. the thing to remember about the voter discipline is it is mostly and coherent. everybody hates deficits and debt and everybody loves their own programs if you do the details surveys and they ask how would you fix the problem the first is cut foreign aid. that is the two orders of magnitude to deal with the problem. politics is about channelling voter infer to the appropriate end. what i compare this, the u.s. system since we continually generate the voter discipline like the circular room -- rumba

the plans i floor, it bounces off-the-wall and eventually gets to the point it can cover everything. we will get to the right place. it will take longer than that live there was an intelligence guiding the process. so in that sense we are not like japan. we are both an absence of the voter discipline and market discipline. but it's going to be expensive. >> the kennedy school of the political was heavy pherae of the u.s. decision making and anything more from the numbers. otherwise i can see the flow moving peery islamic in fact there are -- even though this vision of the rumba may be comforting in the short run that actually there are a number of factors that seem quite positive

for the u.s. economy in the medium term certainly. the energy of look which is very striking that near term we have high energy prices and all the experts tell you the outlook for the energy costs in the united states is differential and unfavorable. not only favorable in the absence but in the relative sense and at the same time we see the corporate sector obviously do sycophant deleveraging on the banking system the underpinnings of the corporate sector talk about the paralysis of uncertainty. in fact as we all know the spending on equipment and software has grown at a solid pace and if everybody was paralyzed with uncertainty, it is hard to understand how that was happening.

at the same time, even though we still have questions about the near-term outlook in the housing sector it's obvious the trend rate of the household formation is probably someplace in a million or 2 million a year, who knows. but since 2008 we've been producing about conceivably have of the new units that are necessary to fill the generic demand trend. all of that suggests that there ought to be if we can get the impediments out of the way the medium term. islamic any questions? >> it doesn't seem to me that we are going to solve this problem without a very significant structural changes on both sides of the atlantic. there is no evidence the

democrats are born to be sufficiently aggressive in cutting entitlements and there is no evidence that the republicans are going to be sufficiently aggressive in raising taxes and we are not going to solve the budget does in problem without doing both. it seems to me that as a panel you are complacent. using the eventually we will solve the problems because we always seem to but there is evidence there's trouble at we have been. we $6 trillion in debt in 2000 and $16 trillion in debt now. it's going about more than a trillion dollars a year and congress won't do anything about it because then we can borrow money so cheaply. they want to anything about it in my opinion until the interest rates go up. by then it will be too late. so i'm worried there are not

enough structural -- there isn't a motivation for the structural change. the same thing is going on in europe. all they are doing is temporarily solving the problem by providing funds. they aren't dealing with the structural issues. the talk about it but if you look at what is going on in italy and spain and it is not enough. my feeling is you are too complacent. i think more or less complacent to the first let me agree that the circumstances are much more than they were in the 1980's and the concerns about these guys expressed about where to get to the point where the market paid attention to the long run sustainability in the united states, that is a very big deal that none of us want to deal with.

number one. number two, there is no question that we are headed in a kind of political environment that is very contentious and very partisan with both sides taking up positions that are hard to move. but i think i what point to the following signs for somewhat more optimism to the first of all, it is clear from all the reporting that the president and the speaker came pretty close to the significant deal last summer that included significant changes on entitlement on the part of the president and some revenue on the part of republicans. now, that obviously that deal didn't come forward there's the basis for some optimism that they worked through the details closely enough to sort of think about those options. second, i take it as progress the fact that chairman ryan put forward a budget that has actively involved going out and getting the congress to vote on spending cuts that are

nontrivial. they are not necessarily what i would choose the the fact that the taken the action of forcing the congress to vote on those things as a sign of some movement in this area. i think this is something that is when to take multiple years to get us there and i would come back to the notion that ultimately what is driving us is a dissatisfaction on the part of the american voters in the fiscal path we are on and that is going to be reflected as it has already been reflected through the elections. that is how you take what happened in 2010 mortgage and anything else so i think you're going to see that reflected going forward. look, i -- one of the things i spend a fair amount of time thinking about is the system at risk and the sort of mother of all systemic risks is if you get the point you see the transition

away from the u.s. treasury's as the safe haven and asset there is nothing that tops that in my mind as a systemic risk. now, having gone through what we went through in 2001, you know, where every -- every day when we had a bad day i checked to make a point believe kosher or the trees were out because of the day when you have a bad day and a risk and the treasury's bond rally is a really big day. laughter, and i have to admit i kind of look at what has happened in the last three years and i ask myself the question okay, like what is it going to take for the foreign investors to look up and say they killed want to own the treasury's? i don't want to get there and i want to do everything to prevent us from getting their but it's hard not to look at what we come through and argue that there is some resilience. >> i'm flattered i could be on

the panel andy was an optimist. [laughter] and i think that my statement isn't about any local optimism it is just a mistake to undercount a market economy that historically has been very resilient and so hysterically we have risen through the challenges we have to make as a nation the realizations. number one the average tax rate has to go up. number two, we don't necessarily get the average tax rate by raising the marginal tax rates in the inefficient tax system. number three, the biggest overvalued assets in the world right now is the net present value of entitlements that our citizens think they are going to get because we don't have a system that can actually deliver that. those are three really hard things. it isn't obvious to me that we have a political system that generates really fast. if we want to look for good news, the good news is this

election is going to be contested on the two distinct visions of the fiscal policy. the better news is that we are in terrible delivery. we are so far in front of the fiscal policy that any which way is up so it is possible to define the two distinct coherent credible visions for what we should do. the size of the government and the progressive tax system, the role of the safety net. we can do it. we just have to -- we will get there eventually. it may wind up being very, very costly and it could be a close run. >> it seems to me several factors that are set the downside risk in europe evident

in europe but it seems to me first of all there is a notion publicly the popular notion and was due almost entirely to the discretionary decisions by u.s. government that reflects the weak reformers of the economy. the deficit ought to be geared towards the normalization of the economy. there is a window of opportunity for improvement in the fiscal policy that it is a danger and it is easy to define. federal debt as a percentage of

gdp is by 50% since the beginning of the crisis and federal debt service as a percentage of gdp has increased by zero. this isn't going to last for get anybody losing faith in the treasuries of the receiving normalization and the normalization of the interest rates the federal debt serves as a percentage of gdp to go up by two or 2.5% by the next administration for the outlook and the next two years it is going to come back and eat them alive this isn't going to go away. and you may be right. everyone is myopic to do anything about it. i hope that you are wrong. let's see what happens. in europe i would say.

what you are basically seeing is an argument about who is going to pay. so i just don't think that it makes sense or is reasonable to expect that while they argue about who is going to pay the bill they are going to go over the cliff. as i call that the wily coyote moment. it could happen. could happen. but as you see, some decisions have been made over the last few months the would seem impossible. it doesn't mean that it is going to succeed. but i think that there is reason for thinking the heavy lifting that we started out with is in fact going to get done. >> one more question number. >> we haven't talked about taxes, as we have a tax clip.

as said average versus the marginal rates is that inevitably get us to the consumption taxes as the population ages? >> i don't think it is inevitable. that is one solution. just following up on the list of good things, one of the things that i am encouraged by as of the discussions that are actually going on but the fundamental tax reform that's sort of part of but really independent of the fiscal story, and i think we have a tax code that is very inefficient and you've had the president come out with a white paper supporting a essentially the risks revenue neutral corporate tax reform. you've got the house during hearings on that now which is the necessary work. succumbing even in the kind of world that obama gets elected and you have the republican congress a think that there's a decent chance we are going to get a fundamental tax reform and i would added that on to the

list. dewey ultimately get the consumption tax? ayman economist, so i can certainly make the argument for why we, are there. i don't think that is part of the debate right now. we are a fair way away from that. but we will see. i do think one of the risks, which i think people largest founding is the notion that free essentially bargaining the strategic reasons we will go off the fiscal cliff. in the sense that the advantage of doing that is then the tax rates recent back to where they were at the beginning of the bush administration and then you can have a different debate which is a debate about what's to a big tax reform that includes cutting the taxes for most people, and that is the more attractive to date for both sides to have them the current one. and so, you know, there is a lot of work being done on what is the economic consequence going off the cliff? a lot depends on whether you think it is permanent or temporary.

.. >> how many members of the eurozone will there be? you're allowed to say 17, 16 or fewer. john? >> 17. >> louis? >> 16 or fewer. >> fewer.

[laughter] >> consensus, thank you very much. [laughter] [applause] [inaudible conversations] >> tomorrow marks the 11th anniversary of the september 11th terrorist attacks, and to mark to case congressional leaders will take part in a ceremony on the east steps of the u.s. capitol honoring the victims and survivor. we'll hear from john boehner, nancy pelosi and senate leaders harry reid and mitch mcconnell. that all begins lye tuesday at 11 -- live tuesday at 11 a.m. eastern on c-span. and with the anniversary of the september 11th attacks, go to our facebook page to tell us how you think america has changed since that day 11 years

ago. you can post your comments and join the conversation with other viewers at facebook.com/c-span. >> up until the battle of antietam, the confederates were on a roll. because with expectations in the south, even in the north and abroad, were that lee would win -- the third time would be the charm. he had won the peninsula campaign, he had won the second battle of bull run, and now he was invading the north, and this was going to be the cue degrace, the crushing blow. and when that didn't happen, i think there was a great sigh of relief in the north. lincoln does take it as the sign he was waiting for to issue the

emancipation prola mission which makes it now a war for freedom. for all these reasons i think antietam stands as the most important turning point of the war. >> this weekend the 150th anniversary of the battle of antietam, authors and historians take your questions on the battle and repurr cushions of the single bloodiest day of fighting in american history, sunday live from antietam national battlefield at noon eastern on c-span3. >> a former adviser to iranian political figures and an insider on iran's nuclear program claims iran is not building a nuclear bomb, and he recently addressed the commonwealth club of california talking about the iranian nuclear program and a possible israeli strike on the country. this is a little more than an hour. >> good evening. and welcome to today's meeting

of the commonwealth club of california, the place where you're in the know. you can find the commonwealth club on the internet at commonwealth club.org. i am phillip yun, executive director of the plowshares fund and your moderator for today's program. this program is also being held in association with the commonwealth club's middle east forum. and now i am pleased to introduce our distinguished speaker, hoe sane mousavian, former policy adviser to the secretary of iran's supreme national security council, visiting research scholar at the woodrow wilson school of public and international affairs at princeton university and author of the iranian nuclear crisis, a memoir. ambassador mousavian's book is the first detailed account from an iranian perspective of events between iran and the west since 2002 when iran's secret nuclear

activities came to light. from reading his book, it is clear that ambassador mousavian is a defender of iran's nuclear program. ambassador mousavian was a prominent iranian official and diplomat, some of his government positions included serving as board to germany -- ambassador to germany in the '90s as well as spokesperson for the iranian nuclear negotiating team from 2003 to 2005. he also was arrested by the government of president mahmoud ahmadinejad on charges of espionage in 2007 and the ambassador talks about this episode in his book. it is safe to say, therefore, that ambassador knew salve january has an insider's perspective on iran and its policymakers. indeed, in light of current events, including talk of a possible israeli strike on iran, it becomes critical for us in the u.s. to better understand what the iranian government is thinking and why. if we are to do all that we can

to figure out an acceptable nonmilitary solution to this nuclear impasse. ladies and gentlemen, please welcome ambassador hussein mousavian. [applause] >> it is great pleasure and honor for me to be with such a distinguished guests tonight. first of all, i would like to thank the organizers of this meeting, george, ricky and also thank phillip for moderating the program. i would like to talk about maybe 25 minutes on iran/relations and the nuclear issue which is the most critical issue between iran and the international community. as the head of foreign relation

committee of iran national security council 1997 to 2005, i'm fully convinced that iran is not after nuclear bomb. and the elimination of weapons of mass destruction and establishment of a zone free from such weapons in the middle east are important elements of iran's national security doctrine. nevertheless, iran's nuclear program has remained the number one political dilemma of the u.s. for past decade. nine years of negotiations between iran and the p5 plus 1, five permanent members of united nations security council plus germany known as p5 plus 1, nuclear issue has failed. and would likely continue to do so as long as hostilities

between iran and the u.s. persist. with -- [inaudible] between national community and iran have once again returned to negotiation table over iran nuclear program. in the past months, they have held talks in us istanbul, moscw and baghdad which have created momentum with very little in substance. while the u.s. has already began economic, political, signer and covert war with iran, it's conceivable that the u.s./iran relations will reach a turning point within a year on the nuclear issue. without substantial progress on the diplomatic front, the chance for unilateral israeli or a joint u.s./israeli military campaign aimed at destroying the

iranian nuclear program could become a probability. it's, therefore, create create important -- critically important for a better with understanding of iran/u.s. dispute on weapons of mass destruction. in an effort to reorient the current diplomatic trajectory. first -- the first question is how did we get here. in prerevolution era western countries were competing to win lucrative projects to nuclearize iran. since the u.s. had close relations with iran and decided to lay the foundation of a nuclear iran. in this period the nuclear technology for iran was essential and justified. in 1976 gerald ford, then-u.s.

president, signed a directive according to which iran was supposed to have a complete nuclear fuel cycle. the ford strategy papers said introduction of nuclear power will both provide for a growing need of iran's economy and free remaining oil resevens for export -- reserves for export or conversion to petrochemicals. the united states and europe had no objection to enrichment plans inside iran. despite the fact the shah had ambition to acquire nuclear weapon. when the shah was asked by a french journalist in 1974 whether iran would pursue a nuclear weapon, he replied: certainly, and sooner than one

would think. after india tested a nuclear device that same year, he said: if other nations in the region acquire nuclear weapon, then perhaps the nation, the national interests of any other country will demand the same. i'm convinced that if the shah were alive today, iran would have many nuclear power plants. the u.s. proposed iran to have 23 power plants by the year 2000. this was the proposal in mid 1970s for iran. i'm convinced if the shah were alive today, iran would have many nuclear power plants in the uranium-enrichment facilities and that iran's nuclear arsenal would be on par with those of pakistan, india and israel.

after revolution 1979, iran remained committed to npt, non-proliferation treaty and decided to shrink ambitious nuclear military projects of the shah. in response, the west withdrew from all nuclear agreements and contracts, sanction and isolated rapp. this was mainly to the hostilities between the u.s. and iran. nevertheless, this event forced iran to go for self-sufficiency, to finish billions of dollars of unfinished projects which iran had already paid to western countries like france and germany and the u.s. furthermore, saddam hussein invaded iran, and the u.s. and the west unfortunately provided support of thety depress sor,

and his use of chemical weapons against iranian civilians with tens of thousands of iranians either killed or injured. this event also changed iran's security calculations. right after iran mastered enrichment technology, iran's nuclear case came under the spotlight in 2003, and the iaea board of governors issued the first resolution on iran's nuclear program. since 2003 and after 4,000 man days of iaea's inspection of iranian nuclear facilities, the u.s. and its allies generally agree on three things about iran's nuclear program. first, tehran does not have a nuclear bomb. second, iran has not decided to build nuclear bomb. and, third, probably years away,

iran is years away from having a deliverable nuclear warhead if decide to develop a nuclear bomb. nevertheless, they believe that iran intends at least to acquire the capability to build nuclear weapon, the capability. that's the question. in a relatively short time, should it deem them necessary. and as a result, they do not trust iran will confine its nuclear activities to nonmilitary purposes. this is the question. in reality iran's nuclear program is a subsidiary issue of iran/west relations. specifically, iran/u.s. relations. while iran/u.s. relations also is a subsidiary issue of

iran/israel issues, conflict between iran and israel. since countries like india, pakistan and israel enjoy strategic relations with the u.s. and the west even though they are not member of non-proliferation treaty and possess massive arsenal of nuclear weapons. where is the problem? and what can be done? on the nuclear issue, talks between iran and event u. 3-d -- e.u.3 in 2003-2005 failed because the u.s. was not on board. agreements between iran, turkey, brazil in may 2010 failed because of the u.s. objection. russia in step-by-step program in summer 2011 failed because the u.s. declined. even the recent talks in

istanbul, bag dodd, moscow failed -- baghdad, moscow failed because the u.s. was not ready to compromise on two major issues in response to iran's overchurch first, recognizing the legitimate rights of npt and gradually lifting sanctions. that's why i always have advocated a realistic dual-track policy. first, the bilateral talk between iran and the u.s. on a comprehensive package including all bilateral, regional and international issues, a direct talk. between iran and the u.s. the second track between iran and the p5 plus 1 on the nuclear issue. this is the two track i believe

we need to be held in parallel. otherwise, iran's talk with the p5 plus 1 would not work. on iran/u.s. talks, despite harsh rhetoric, president ahmadinejad had reached out to the u.s. more than all previous iranian presidents since 1979. because he had a freer hand to approachment with the u.s. during this time he has written letters to both presidents george w. bush and barack obama, including congratulating the latter on his electoral victory in 2008 while the u.s. counterparts have never responded to him. during the first presidential period, 2005-2009, ahmadinejad's top adviser met with william

perry, the former u.s. defense secretary, and two u.s. congressmen in a round table meeting organized by -- [inaudible] in ruin yang capital. currently obama's top adviser on terrorism and proliferation issues and the iranian ambassador at the iaea also participated in the talks. right after the iranian presidential election in 2009, ahmadinejad send a message to barack obama via the former head of iaea that he wanted, ahmadinejad wanted direct talks with the united states and is ready to cooperate and help the in afghanistan and elsewhere. this was the message. in october 2009 the highest-level talks ever held between american and iranians

took place between u.s. undersecretary and iran's top nuclear negotiator. president barack obama also made some unprecedented diplomatic gestures toward iran. raising hopes that animosities that have plagued u.s./iran relations for the past three decades might be overcome, and rapprochement achieved. president obama's call for engagement without precondition and set was the first for any american president since iran's 1979 revolution. hence, obama's initial gesture were met with positive sign from tehran. obama sent two letters to iran's supreme leader, ayatollah khamenei, who responded. in addition to two add information have --

administration have quietly encouraged one-half-track dialogue in one former high u.s. officials met with current iranian officials. not just once, maybe about 10, 15 meetings. despite this unprecedented effort by both presidents, engagement has failed thus far and will continue to fail as long as both sides undermine with dual-track approaches. official statements and now diplomatic cables released by wikileaks show that since early on in obama's tenure even as that administration spoke of rapprochement, the u.s. continued the bush administration's policy of increasing pressures on iran through new sanctions. hinting at a readiness to take military action and supporting covert sabotage of's nuclear

program. of iran's nuclear program. during obama's engagement policy, the u.s. has taken the toughest policies to date. against iran. the most far-reaching sanctions legislation in the history of iran/u.s. relations by congress. securing four united nations security council resolutions, specifically resolution 1979 -- 1929 as the most comprehensive sanction the international community has ever approved against iran. the u.s. navy ordered all units under its command to relabel the persian gulf as the arabian gulf. sabotage against iran's nuclear program through spying and covert actions. orchestrating international pressure on iran to impose

additional unilateral sanctions beyond the role of the current u.n. sanctions. u.s.-led sanctions against iranian oil industry is costing $133 million a day. following the congressional election in 2011, the director of tell avive -- tel aviv base economic and political analyst company called on incoming republican members of congress to support president obama's iran policy because he said, as he said obama has done more to undermine iran over the course of two years than george w. bush did in eight years. in response to the u.s. dual-track policy, the iranian leader noted: they say that they have extended their arm toward iran. what kind of hand?

if it's an iron hand concealed with a -- [inaudible] then it will not make any good sense. these actions have made the iranian side believe that obama's talk of engagement with iran is just talk and have also raised the costs for the iranian side to approach the u.s. for rapprochement. iran, meanwhile, has pursued a dual track of its own. ahmadinejad has sabotaged his engagement policy with inflammatory rhetoric that has antagonized the u.s. and its allies, questioning the holocaust, suggesting that the terrorist attack of 9/11 was a u.s. government conspiracy and that israel must be erased from the page of history. such rhetoric has also increased the political cost tremendously

for american politicians if they were seen to be soft on iran. this approach has been counterproductive, the dual track, and has left an impression in tehran and that the other side has no real interest and intention in thawing relations. therefore, due to dual-track approach, both sides are confused about whether engagement is for the other side a strategy or a tactic. the second main problem is piecemeal approach. iran is after a comprehensive deal with the u.s. to be sure that the entire game plan including the end goal before committing itself to anything. iran is asking for grand bargain, including the nuclear issue. the u.s., on the other hand, is

suggesting a piecemeal approach. iranians have experienced such policy for the last three decades with no success. due to past experiences, i believe we need a mixed approach, which i would introduce. to revive relations between washington and tehran, the following principles can facilitate a constructive engagement policy. the measures which i propose tehran and washington they take at least during engagement policy and negotiations. first, dual-track approaches are ceased for the period of negotiations. second, the language of threats and harsh rhetoric is set aside. third, hostile actions, sanctions and other forms of coercion, coercive pressures are

put on hold. to agree on a comprehensive agenda -- this is what iran wants -- including all bilateral, regional and international issues demonstrating the entire game plan but implementing through a phased approach plan. this is what the u.s. wants. this is the mixed approach. a comprehensive package implementing in phased approach. this is the way out. issues of common interest are given priority in the talks. iran and the u.s. have common interests in many strategic issues -- [inaudible] national interests like security and stability of afghanistan and iraq, combating al-qaeda terrorist networks and preventing drug trafficking. such a skillful approach would

be only possible if and when tehran and washington can isolate internal and external spoilers. the framework on nuclear dilemma, on the nuclear issue iran and p5 plus 1 can agree on a face-saving solution where iran would adhere to all international nuclear conventions and treatyies at the maximum level of transparency defined by the iaea, international atomic energy agency, to insure the peaceful nature of iranian nuclear activities and also to insure international community that iranian nuclear program would remain forever not on the peaceful, iran would be committed forever to be a non-nuclear weapon state.

in the war the u.s. would also agree to recognize the legitimate rights of iran under npt for enrichment and to lift the sanctions gradually. this framework can be realized in future nuclear talks through step-by-step plan based on npt, mutual confidence building and -- [inaudible] as agreed in istanbul talks in april 2012. and the last point, to insure a long-term, sustainable solution, the united nations security council in cooperation with regional powers should proactively pursue the elimination of weapons of mass destruction in the middle east. this is the best and sustainable, durable solution for all middle eastern countries. i would direct you, phillip, for your questions. [applause] thank you.

>> our thanks to ambassador mousavian, former foreign policy adviser to the iran supreme national security council, visiting research scholar at the woodrow wilson school of political and international affairs at princeton university and author of "the iranian nuclear crisis: a memoir." and now it's time for audience questions. we've got a number of them, um, and they cover a wide range. let's start with something at least to get you started in this is a question that a couple people asked about why you wrote the book. and it would be, i thought it would be good to open with this in the q&a solution because people can clearly understand what your perspective is. you're an iranian nationalist. you're no great friend of president ahmadinejad, but you're not a dissident either. and you're part of a moderate group, i think some people would

talk, would say an advocate for iran's nuclear policy. can you tell us the motivation, then, of why you thought it was important to write this book and talk with people about it. >> in iran they know, phillip, i have been advocating for 30 years good relation between iran and the u.s., iran and the west. the problem is the lack of understanding in both sides. americans, they do not understand iran. iranians, they do not understand america. the second major problem is mistrust. but mistrust is mutual. americans and western countries, they need to understand why iran cannot trust the west. they have their own legitimate reasons. like americans and western countries, they cannot trust

iran. iranians, also, they should understand why. being here i thought maybe that the most important job i can do to write a book on the nuclear issue as far as the nuclear issue is the issue number one for the u.s. and international community to present the way, the perspective and point of view of the iranians for american public opinion and politicians, to facilitate a possible peaceful solution for iranian nuclear crisis. >> okay. there are a number of other questions, um, and you allude to this, related to trust. what to you say to those americans who argue that iran, a deal with iran is really useless, that the iranian government cannot be trusted and cannot be relied upon to fulfill its promises? and there are other people who say that a deal with iran is not

possible because the iranian regime is irrational and on dominating the middle east and committed to defeating the west. and they point to president ahmadinejad's outrageous comments on israel, the holocaust, 9/11 as well as iranian ties to terrorist groups. um, i think part of this also goes to in a certain way, does te tenderness work -- deterrence work related to iran, and can you talk about that? >> you hear a lot on interviews, op-eds, reports, they are always talking about ahmadinejad's statement on holocaust and wiping israel off the map. although ahmadinejad himself said this has been completely misinterpreted. although the deputy prime minister of israel just two, three months ago had an interview, deputy of prime minister netanyahu, prime

minister of israel, said from the beginning we knew ahmadinejad had not made such a statement, and this was misinterpretation. whether this was true or not is other issue, but the fact and the reality is the u.s. policy since revolution 1979 has been based on regime change. it doesn't matter you have had eight years moderate president or a reformist president or a conservative or radical president of ahmadinejad. the policy of the u.s. has been regime change. therefore, we should not deceive ourselves to just confine the period, to discuss the period of am deep squad -- ahmadinejad and his rhetoric on holocaust or israel. this has been the constant policy of the u.s. if you had studied the u.s.

policies toward iran, you would see continuous increasing of sanctions is and pressures -- sanctions and pressures, even during the moderate presidents. this is the issue. i understand, phillip, a lot of people they say there is no use to trust iran, and in iran also they say there is no use to trust the u.s. this is exactly the same. iranians also, they have their own justification. they say we have democratically-elected prime minister in 1953. the made a coup d'etat and bring the dictator. they say the u.s. supported 25 years, quarter of century a dictator, shah, in iran. they say the u.s. is not true about democracy because they were supporting dictators.

they say the u.s. supported saddam hussein for invasion of iran. and even the provided a chemical weapons and technology for saddam hussein to use against iranians, which is true. i mean, they have their own justification, and americans also they have their own justification. americans also they would talk about hostages in 1979. americans, they would talk about american embassy bombing in 1982, and they have, both of them they have a long list. but my point is this: iranians, they have approached the u.s. during all administrations for a comprehensive package and comprehensive dealment -- deal. when you read my book, you will see that i have explained during three top nuclear negotiators since 2003 during president 40

tammy, all have sent message for white house that we want grand bargain with you, we want a comprehensive deal and relation with you including the nuclear. but the u.s. has declined. the united states has never proposed iran a comprehensive package, never. my point is this: first, try at least once. i really don't care in iran whether we have conservative or moderate president or reformist. because i have been working for 16 years under rather san janney, and i know we did our out to get a -- utmost to get, to bring the relation, to improve the relation with the

u.s., and the u.s. always declined. therefore, this is the same policy during ahmadinejad. i mean, but they can use, they have better justification during ahmadinejad. they use holocaust and all this rhetoric which is very harmful for iran's national interests. my suggestion is this, any u.s. administration i hope after election, because we cannot talk before election -- [laughter] propose at least once after 33 years a comprehensive package including terrorism, weapons of mass destruction, peace process, israel, human rights, democracy, all these major points for the u.s. and iranians, also, they have their own shopping list. they, the u.s., also should be prepared to add iranian concerns. if it failed, then come to your public and say, it doesn't work to try. because you have never tried. the u.s. has never tried.

>> okay. i've been asked to make this reminder for our listening audience and radio, you're listening to the commonwealth radio program, and our guest is ambassador mousavian, former foreign policy adviser to the iran supreme council. we had a number of questions related to israel and a military strike, and in a recent op-ed you gave 20 reasons not to attack iran, and you were quite explicit, calling a military strike idiotic. tell us why you think, tell us why or some of the reasons why you think this is the case, and to you fear that a strike can happen within the next six months or so? >> i don't want to see the u.s. as a warfare country. i really don't like it. i really don't know what the u.s. gained attacking

afghanistan and iraq. trillions of dollars, thousands of americans, they lost their lives. tens of thousands of afghanis and iraqis, they lost their life. what was the excuse? weapons of mass destruction. it was a lie. who did it? i don't know. war on terror against al-qaeda and taliban, after ten years now the u.s. is doing its best to negotiate with taliban how to manage afghanistan. if it was your objective, you could do it at the beginning. [laughter] [applause] i mean, i really dope understand what the u.s. could gain after two wars. this is -- i really don't understand what the u.s. could gain after two wars. this is exactly the reason i say this would be a disaster for u.s., for iran, for israel to go to the fourth war against muslim

country in the region. first of all, if the target is iranian nuclear program, it may delay. but you would never be able to remove iranian nuclear technology because they have, this is homemade. they have technology, they have knowledge, and if you destroy one facility, they would build tomorrow another facility. this is not the way. and i think that the main loser would be israel. already israel is isolated worldwide. and another war pushed by israel, i believe, would create more hateness toward israel. america and israel, they are doing their best to introduce iran as threat number one in the

middle east. i understand why they are doing their best. for me, i understand. but a poll by arab institute covering 86% of arab countries in 2011 shows by a ratio of 15 by 1 it means 94% of arab people, they consider the u.s. and israel as the number one threat. only 5%, 6%, they consider iran. are you going to win the nations? this is how arabs and muslims, they are thinking about the u.s. this is why i don't like it. i want to bring a major change to the mindset of 1.5 billion muslims toward americans and america.

>> as a follow up, do you think there can be peace between iran and israel? >> here is the crux of the matter, i believe, is more hostilities between iran and the u.s. would bring more hostilities from iranian toward israel. israelis, they are doing their utmost to create more hostility between iran and the u.s. they are pushing the u.s. toward war. but they do not understand that this would create more hostilities toward israel. i believe rapprochement between iran and the u.s. is the only way to modify iran's position. and i really do not see any other alternative. >> so in that sense you think

that it is possible that, um, it is a possibility that iran at some point would could recognize israel's right to exist? >> phillip, the recognition of israel is not iran issue. almost majority of u.s. allies in the region like saudi arabia, also, they do not recognize israel. i mean, why you are always talking about iran, why you are not talking about the u.s. allies. they do not recognize israel. majority of them. we have 57 countries, muslim countries. how many of them, they recognize israel? more than 50, they do not recognize. or at least majority they do not, i don't know exactly the numbers, but i'm convinced 100%, i'm sure, the majority which they all have each good relations with the united states, they do not recognize

israel. recognition of israel is not iran issue, is an issue with all muslim countries. with 1.5 billion muslims. i think netanyahu's policy is the major problem for peace process, not iran policy. if netanyahu was really rational, he would have cooperated with president obama on two-state solutions. he is blocking the two-state solution. if he was cooperating with the, with the u.s. president to bring the two--state solutions and if iran was going to disturb this agreement, then you could claim iran's against it. >> okay. there are a number of questions related to intelligent. you stated -- intent. you stated in your remarks your belief that iran is not attempting to acquire a nuclear

bomb. but iran has repeatedly failed to be transparent about its activities activities and in many cases, arguably, has misrepresented them. what is iran trying to achieve by being so defiant? and, again, as a follow up, you talk about the difference between making a decision to create an operational nuclear weapon and having the capacity to produce a nuclear weapon. are they not one and the same? >> i believe 80% of realities related to nuclear talks between p5 plus 1 and iran has not been discussed in u.s. media. the realities, the facts. that's why the u.s. public opinion, they are unfortunately deprived from the realities. in 2010, february 2010, the head of iranian atomic energy

organization which now is the foreign minister, mr. saw la ha hi -- salahi, proposed the p5 plus 1 to provide fuel rods for tehran research reactor which is a reactor built by americans and is used for isotopes for 800,000 patients struggling with cancer. they need fuel rod to continue to run this nuclear facility. iranians propose that we would not increase the level of enrichment beyond 3.5%. if the u.s. and the p5 plus 1 provide the fuel rod for tehran. in order to build the fuel rod, you need to increase enrichment to 20% then to build the fuel rod. without 20% you cannot build it.

it was iran proposed the u.s. and europeans that we do not want to have high-level enrichment. we want to stay below 5%. we don't want to have 20%. just give us the fuel rods. the western countries, they declined. iran had no other option to increase the level of enrichment to 20%. when you read stories about iranian nuclear issue today, the core issue is 20%. iran has enriched up to 20%, therefore, they want to make nuclear bomb. this is the story you read everywhere. but they don't tell you the truth. in september 2011 iranian foreign minister and president, they came to new york here for united nation assembly, and they proposed the u.s. and the west. they said now we have 20%. we are ready to stop.

we are ready to go back to 3.5%. if you provide us the fuel rod. because about a million patients with cancer, they need it. and they said, they declined. it was iranian proposal to stop 20%, to go back to below 5% as long as enrichment is below 5%, there is no danger of any nuclear weapon at all. everybody knows. then iran had to build its own fuel rod to run this tehran research reactor. but again in summer 2011 the russians, they brought a proposal, phillip, to table. it was -- i personally was shocked how iran welcomed this

proposal. because russians, they proposed for iran to implement additional protocol and subsidiary arrangement called 3.1. many of you maybe you don't know what is this protocols, but just to brief you, if a country accepts these two arrangements, this would be -- the country would be committed to the maximum level of transparency which internationally exists. tens of countries, they have not been ready to sign additional protocol even today. because signing additional protocol you have to give access even to your military sites. many countries, they hesitate. this was one part. and this issue is the major requirement of the united nations security council and atomic energy organizations. the major requirement for

transparency is for iran to accept this additional protocol and subsidiary called 3.1. another element of this proposal was for iran to be committed not to exceed enrichment beyond 5%, keep its enrichment activities always below 5%. the other element was to give 100% transparency not based on additional protocol, even more. here i was shocked. when i heard iran has given positive signal. to address possible military dimension known as pmd, iaea has some question about military dimension of iranian nuclear facilities. they say pmd. to address pmd issues which iaea required, iran has to give access beyond additional

protocol. i i mean, those access which no single country in the world is ready to give to the iaea. only unlimited access with no restriction beyond additional protocol, beyond npt. the other element was for iran to have only one enrichment facility. iran already has two and was announced it would go for ten because to build 20 nuclear power plants proposed by u.s., you would have to have many enrichment facilities. the russian proposal was for iran to have only one. russian proposal required iran to stop developing new generation of centrifuges. all these activities are legal by npt. all legitimate and legal.

at the end of the proposal was for iran to suspend its enrichment for three months. i personally was shocked how tehran has even a green light to p5 plus 1 to accept such a proposal which would give access to the iaea beyond npt, beyond additional protocol, unlimited access to have only one enrichment to stop new generation of centrifuges. all these ricks. but iran's -- restrictions. but iran's public minister publicly said iran is positive toward initiative and is ready to discuss details. but immediately the u.s. and the europeans, they rejected the russian proposal. my argument is that at least this proposal could be a base for negotiations. this is the fact. i mean, even today, even today

on the negotiation table american team, they know very well, and i, i can guess state department is also very much willing to go for such a deal. but you know the position of congress, they don't want the u.s. president to recognize the rights of iran for enrichment. this is official statement of the congress. if iran is supposed to be member of npt, if iran is supposed to be member of international community, there should be no discrimination. this is the legitimate rights. why europeans, they have enrichment up to 96%, and iran cannot have enrichment below 5%. the reason i am for supporting iranian nuclear right, because this is not a matter for

ahmadinejad. this is an issue of national pride and consensus in iran. no matter we have conservative president, reformist president, even clerics or shah. this was exactly the red line of shah, the u.s. allies. shah was also emphasizing on the rights of iranian nation under npt. and this is exactly what the current nuclear negotiations, negotiators, they are emphasizing. they don't want anything more than their rights. like any other member of npt. if the is prepared to accept, then you would see iran would open all doors for transparency, cooperation to give all assurances that this country would remain as non-nuclear weapon state. >> so following, a short follow-up question then. it seems to me that the right to enrich and peaceful use of nuclear energy is a matter of principle for iran x the

question -- and the question here was saying as a practical matter, would iran consider or are they considering alternative energy sources, solar, others that may somehow be part of any kind of solution? is there a -- >> of course we welcome all sources of energies, but do you mean that iran would accept to be deprived from the rights under npt for peaceful nuclear technology? no. if those are making this argument, iranian nation would never accept to be vim niced -- disvim niced or singled out. it is impossible. >> this okay. the next set of questions had to do with the policy-making process, and very loosely what i call who's in charge. can you talk more about the iranian policy-making process?

who has the final say? there's considerable confusion, i think, among the audience, i would think, and others particularly -- you know, and others in the united states about the role of the president, whether it be ahmadinejad or asianny or khatami. on one hand the ayatollah khamenei and the mullahs. so can you give us a better sense of, you know, who can speak for iran, and under what circumstances? and then there's a larger question about the competition that happens. because i think in iran it's not a monolith. there are a lot of different factions. how does that play into all of this? >> if you compared iranian constitution with american constitution, you would see 95% of authorities of iranian supreme leader is like u.s. president. here the u.s. president ultimately should have the final say on foreign policy which many

times he cannot like engagement policy with iran. he failed because he couldn't deliver. in iran the ultimate decision maker by constitution is supreme leader. but it has a process. we have foreign ministry, presidency, we have national security council which the speaker of parliament, head of judiciary, foreign minister, defense minister, interior minister, they all are there. and they discuss the issues. and they decide. then they send the decision for the leader to approve. if the leader approves, they can implement the policy. if he rejects, they cannot implement the policy. but in order to understand iranian decision making process,

look during our time when i was part of nuclear negotiation team during 2003-2005, all nuclear policies we had we decided to implement additional protocol voluntarily. we decided to implement subsidiary arrangement voluntarily. we decided to give access to the iaea to military sites voluntarily. even we decided to suspend uranium enrichment for a while as a confidence-building measure but voluntarily. although iranian leader personally didn't like none of these policies, but he did not reject it. because this was national security council decision. at the same time, during ahmadinejad they decided to stop additional protocol, you see

completely different policy during two administrations. and during our time the leader accepted our proposal, during ahmadinejad time also the leader accepted. although from the beginning he believed as much as we cooperate more with iaea and with the west on nuclear program, they would increase pressures more and more and more. because they want -- he was telling us that they only want to deprive iran from it rights. for enrichment. they are not sincere for transparency. they know we don't have nuclear weapon, they know we don't want nuclear weapon, but they do not want iran to have enrichment. that's it. that's why he was telling us that's why they are after suspension. and still this is the western policy. their core request from iran is suspension. >> let's talk then or move to

the negotiations themselves and components of that. you've talked a lot about that already. i found it really interesting in your book, you talk about the current deadlock on the nuclear issue as the result of two missed calculations. and one part on the part of the united states and the europeans and one on the part of powerful factions in iran. ..

>> we do not have a nuclear bomb. why they should sanction iran, there is no reason for it. the issues politically, legally they were right. but politically they couldn't understand. this was a big problem and they believe we are intimidated or the western demand and preventing around him failed security council and sanctions.

but they changed the policy and they understood. because the case immediately was deferred in 2,522,006 and they originally started the plan. it was immediately deferred to the u.n. security council even though they had no have no common there was not a decision to make a bomb. they had something in their minds, which they were hiding from us. but i did read the nuclear information. we were telling them that if you think you would be able to bring your own to the final secession of the nuclear program through the suspension in the negotiation, you're wrong it's

not going to happen. this is for sure. lack of time. non-legally binding. just a conference purposes. no one in iran would be able to deprive the nation from those strikes. but they have that in mind because of u.s. pressure. aligning the negotiations and asking them to suspend the negotiation as long as negotiation continues. when they they asked in 2005 before the meeting. i saw i was a 1011 page proposal with good intentions. i just checked one point,

suspension. talking about the period of negotiations. i asked him, what do you mean by this. the period of negotiations. one months, five years, one century. what is this period. he said, you know, ambassador, at least for 10 years. [laughter] immediately after the media read the notes of the meetings, he said this is what i told you from the beginning. you should not trust them, they are lying. and then they decided to start enrichment.

i believe now they have learned lessons. americans and europeans, they understand because of who his ruling iran. and among the sanctions and pressures, iranians would not revoke the rights. they were emphasizing that we do not want bombs. the iranians also have understood pressures, sanctions, and etc. this is the time for both after the lessons to sit together for the year u.s. and europeans. to propose transparencies and objection objective guarantees for diversion for the egypt purposes. the least of measures for confidence building measures.

they know how to do this. if iran accepts transparency measures, confidence measures, 100% transparency for its enrichment program. stay under 5% in all of these confidence measures, gradually lifting the sanctions. because the sanctions only and only are penalizing the rainy and nation. the iranian nation may be the only nation or among the military nations, which they like that.

>> we have time for one quick question. this evening, for those of the people here in the audience, listening on television and radio, what do you want them to take away from this this evening. what would you like them to take away from your remarks? >> and the hostility. i believe enough is enough, really really want to continue this for another 33 years? this is my main message. [applause] >> i think mossein mousavian. thank you, the former supreme adviser to the u.n. supreme security council.

and author of the iranian nuclear crisis, mr mark. we think our audience here and on radio television and the internet. and we would also like to remind you that copies of the book are on sale in the lobby and he is pleased to sign him. this program has been held in association with the commonwealth club's middle east forum. i am philip young, now this meeting of the commonwealth club of california, the place where you are in the know is adjourned. [applause] >> tomorrow is the 11th anniversary of the september 11 terror attacks. on "washington journal", alaska senator and homeland security member mark begich talked about national security. after that, mac thornberry discusses homeland security issues and the state of al qaeda. we will hear more about al qaeda from former deputy national

security adviser on zarate. us lester e-mails, phone calls and tweets. live tuesday morning at 7:00 a.m. eastern on c-span2. >> what is the picture like the lawmakers this week? what is on their agenda? >> there are a lot of different bills. the big ones are a continuation of government funding and taking them into the next year, if they don't do anything, and the government at the end of this month, looking at extending it all the way past a lame-duck session, essentially taking that out of the things that have been going on. also talking about the intelligence surveillance act. they are considering whether or not they will deal with the farm bill, which is always sort of hanging out there. and then planning on taking out

a veteran stock job korbel. john scored >> normally this is a huge fight this time around. the democratic leadership in the republican leadership in the house a couple months ago announced that they were going to take this all off the table and had agreed on what they called a short-term. it was a long-term extension that extends into next year. and they have already agreed upon the outlines of that and are still working on the details. they have agreed on that and more importantly, it sounds like they're not going to put up with

they shouldn't. continuing resolutions take all the current programs and extend them into the next year. the question is conservatives usually want to see the overall number come down a little bit and what they have done is agreed to use the numbers that were in last year's deal, they have agreed to adhere to those. that is taking a lot playing out of this issue. >> there is a bill coming up later up with sequestration. can you tell us about that and what lawmakers are likely to bring up during the debate? >> this comes on the heels of the debate that has been happening over the last couple of weeks or so. about a month or so, right before they ran out in late july or early august, they passed a bill that required the president to lay out the sequestration and where the defense cuts and other cuts would come from specifically, trying to put political pressure on all sides to try and get rid of these cuts. the president actually missed the deadline for doing that.

just ahead of that from the house is going to vote to try to undo those costs. they've are to take a couple of different votes to undo the defense cuts and they are going to take one more vote on that. it is essentially not likely to go anywhere in the senate. democrats and some republicans like having those hanging out there, those spending cuts come as pressure to try to force those guys actually get a long-term yield bond on some of these issues. it is a messaging briefly you will see this week. >> we could redirect, what other measures are on the congressional agenda before lawmakers head home to campaign for reelection? >> you know, there is a suspension calendar, which is a lot of measures that. they need a two thirds vote. among those, the house is going to talk about the douglas budget

statute. there are things i'm dealing with a lot of housekeeping things. they will be gone once they get out of this for this two-week stretch. they will be gone until after the election. it basically a chance to take care of all the legislation that piled up during the summer that they didn't do too. and deal with stuff before they go out before they have a month and half break again. >> thank you for your time. he is the politics editor for the washington times. >> my pleasure. >> in four weeks, first of the presidential debate live on c-span. c-span radio and c-span.org. watch and engage. next on c-span2, panelists at the brookings institution talk about defense policy and national security issues relating to terrorism. then a discussion about the future of the world economy.

later, look at the iranian nuclear program with remarks from a former adviser to key iranian officials. >> watch and engage with c-span as our campaign coverage continues towards election day. and the candidates prepare to face off in 390 minute debates. wednesday the third, domestic policy is that they focus from the university of denver. tuesday, the 16th, candidates will take audience questions in a town hall meeting. the final debate, monday, the 22nd, questions will shift to foreign policy. that is from lynn university in florida. also, watch the vice presidential candidate debate thursday, september 11, in danville, kentucky. through the election, we will also cover key house and senate races, looking at the control of congress. follow our coverage on c-span, c-span radio, and online at c-span.org. >> the presidential election is

a weeks away. here's a look at how president obama and mitt romney are spending the next few days on the campaign trail. president obama has to swing states nevada and colorado or if he won both states in 2008. mitt romney also heads there on tuesday before visiting florida and virginia. those states where blue in 2008 and together they have 42 electoral votes. watch c-span this campaign season as we continue our road to the white house coverage. >> you are watching c-span2 at politics and public affairs weekdays featuring live coverage of the u.s. senate. on weeknights, watch key public policy then spend every weekend, the latest nonfiction authors and books on booktv. you can see past programs and get our schedules on her website. you can join in the conversation on social media sites. next time a brookings institution discussion on defense policy. panelists discussed the

differences between president obama and mitt romney. this is one hour and 35 minutes. >> why don't we go ahead and begin. i am the director here at the brookings defense institution. i am peter singer. we are talking about the 2012 presidential election. in many ways, the issues in defense and national security have never been more important and more dynamic than they are today. we have over 80,000 u.s. troops in afghanistan today engaged in a decade old conflict. we have emerging strategic threats and asia. we have game changing technologies like robotics that have massive impacts not just on

the battlefield but also shaping the decisions off the battlefield. we have new domains of potential conflict like cyberspace. and we have a defense budget that is best described as influx the potential half trillion dollars worth of cuts over the next decade looming that could seriously affect not just the military, but also the broader defense economy. yet, in many ways, defense has been largely absent from this campaign. yes, we have some mentions here and there, but it's mostly been in the realm of symbolism and wedging. using the optics of making a vp announcement on a retired battleship or issuing talking points on how many times you mention the military, your convention versus the other time mentioning the military. while that may be frustrating to those of us, one can't blame the

campaign too much for not highlighting defense and their strategies, as that seems to match where much of the american public is right now. for example, bbc news and he "washington post" a couple the talked about questioning voters. what is the single most important issue in their choice for president. 52% said the economy. number two is health care at 7%. neither defense or foreign policy registered enough to make it outside of the other category. reuters asked the question, which one of these core issues would you say is most important when thinking about the current presidential election. is it that jobs and the economy. is it healthier, leadership, national security, taxes, foreign policy or representing change? jobs and the economy came in first at 53%. national security.5% and foreign security got 3%. only jobs, economy, and helped

her crossed the 10% mark made it into the double digits. we hope to do today is to actually pull back and have a rich discussion on important questions that surround the selections of the person that our prosecution makes clear that their primary responsibility is to be the commander-in-chief. we will explore issues like how the presidential candidates should be armed be armed forces and were they agree and where they disagree. what broader reality, both within the control but also beyond the control will affect the decisions on these matters. to do so, we have a really fantastic panel for you today. first we will hear from michael hanlon. he runs the defense issues. tran-sixes little league

if you go online from you can read the hundreds of thousands of articles he has written. on top of that, he has written several great books. the wounded giant, america's armed forces and the nation of posterity. in the science of war. he is working on a new publication with steve pfeiffer entitled why nuclear arms control is more important. next we have marvin kalb. he served in the u.s. air force reserve. he presently is a senior fellow for the defense budget studies at the strategic budget assessments. he is one of the top voices on the defense budget and modernization initiatives from the defense industrial base, and finally, we will hear from a

scholar at brookings. marvin kalb is a graduate of city college of new york with a doctorate in russian history. he left to join the moscow state department in 1956, which then led to a 30 year career in journalism. with both cbs and nbc news come to serve as chief diplomatic correspondent. and moderator of "meet the press." earning two peabody awards among many others. here he is also the co-author of 10 nonfiction books, as well as two novels. the most recent of which was vietnam and the american presidency. he is presently a scholar and resident journalist at brookings as well as the presidential fellow at george washington university. it is a great lineup with a lot of expertise. we will turn it over to all of you. >> thank you for the kind words, and of course, peter has written the most important book in the

country on robotics and the future of warfare. we hope that our moderator will not be shy if we get questions on these technologies from you. let me thank all of you for being here instead of going to the redskins ticker tape parade and going on this gorgeous september afternoon. a brief word, today, september 10, marks the pre-anniversary of september 11. we have held our country together in the last 11 years. also first responders and everyday americans making their communities work, their families, allies, remembrance is important. i want to make a couple of points when you think about obama versus romney on defense policy. one thing to say up front is it may not even matter that much what they say on paper but they're both going to have to

deal with reality, including an starting with the looming specter of sequestration. neither one wants it, and yet it could happen before either one would be inaugurated on january 20. this would add additional cuts of roughly 10% in magnitude to what has already happened. in other words, another $500 billion over 10 years. i'm not going to begin with that subject because it's not what the candidates say they want to do. let me begin with what they say they want to do and then we can go from there on the discussion. president president obama, as you know, began his presidency with a plan that would've allowed a modest real defense spending growth over the future years. in other words, little bit more than the rate of inflation. that was seen as a way, and this is, by the way, then stop in my opening remarks in a different category. the core budget, the base budget.

obama initially wanted to have more money to buy more equipment largely, as well as more mundane matters like rising health care costs. but obama knew that we had had the so-called holiday in the 1990s. george w. bush had made only gradual progress towards addressing that in his presidency. so there was still more to do by way of adding money to satisfy the unmet procurement needs of the services. there were other reasons, too. that was obama's initial plan back in 2009. by the way, romney spent a day looks a lot like obama's plan in 2009. one broad theme is the difference between these two gentlemen are important, but not necessarily earth shattering not necessarily tectonic and their significance. you could almost imagine this as a bomb in 2009 versus obama 2012

in terms of the range of debate over the proper future of our budget. president obama needs to begin with that plan. in the next couple of years, one of the consequences of our ongoing deficit problem, and of course, increased focus on the need to make changes in the federal budget deficit. a lot of our people have been arguing broad-based deficit reduction. the pentagon began to get in the spirit. bob gates started through this without any kind of broader framework. it lasted until 2011 and produced all of these broader efforts that were familiar. not enough on entitlement reform and not enough on tax reform but it began to put defense cuts and a brighter perspective. it influenced president obama's decision to cut things substantially. we heard in 2011 is speech-enabled talking about the

need to cut 400 billion from the pentagon budget and the budget control act to increase that number closer to $500. some people will point out that that is relative to the previous plan, it is not actually 500 billion in net cuts. depending on what they have wanted to use, it is more than $350 billion in net cuts which are frontloaded. we are cutting of it right now and these years. after that, as todd harrison's paper, written a couple of weeks ago, you start to get growth with inflation. you see the shape of the curve. if you are wondering how this budget looks in perspective, peter has a very good paper he is working on on this issue as well. obama, by 2015, would have to spend as much as we were

spending by the end of george w. bush's first term. and that is including by that point, some more cost. the peacetime budgets for 2015 would be equivalent in real dollar terms. there are all sorts of different ways that people will throw these comparisons at you. whether it is these base budget versus outlays. but obama's cuts will give an excess under anything that we had under bill clinton and the first term of president bush. but, you know, it's going to be tough and there will be some cuts to accomplish that, including roughly 100,000 active-duty forces and acting the services to give up the aspirations of growing procurement budgets to like to get healthy overtime.

governor romney has that i like obama's plan in 2009 better than i like obama's plan from 2012. it is not entirely clear to me that governor romney would reverse those modest cuts or reverse the cuts that obama made last year and then put into his budget plan is presented to congress and the wording in the romney plan is not entirely clear to me. in any event, it adds up to roughly $500 billion over 10 years. that is the difference between the two. in other words, roughly $50 billion per year. that is relative to something near $550 billion. it was significant, but not hugely astronomical. a spectrum of about 10%. romney hasn't been all that specific of what he would do with that amount of money from but apparently he would not make that cut in 100,000 ground

forces and he would shift the budget from the current projection of about nine for the u.s. navy after about 13. that is the kind of sensitivity you can hear. i'm going to stop right there. >> okay. first, i would like to offer a little bit of caution. we are making a comparison where we have different degrees of detail. the incumbent president, president obama, has a defense plan that is laid out in excruciating detail. he has to do that as the sitting president. he has to submit a budget in february to congress. and that actually goes out to 2017, beyond the next presidential term. we could look at that and see exactly what the president plans to go in terms of spending and pacific programs and structure. that can be both an asset and liability. because when you do that, you have